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12 Cards in this Set

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  • Back

ORC

Operations, Reporting, Compliance

CRIME

Control environment


Risk assessment


Information & communication


Monitoring


(Existing) control activities



Applies to all ORC objectives

Control Environment

"C" of CRIME


Tone at the top



5 principles are EBOCA

EBOCA

The 5 principles of CRIME:


Ethics & integrity (commitment to)


Board Independence and oversight


Organizational structure


Commitment to competence


Accountability

SAFR

4 principles for "R" in CRIME:


Specify objectives


Identify and Assess risks


Consider potential for Fraud


Identify and analyze Risks

SAFR

4 principles for "R" in CRIME:


Specify objectives


Identify and Assess risks


Consider potential for Fraud


Identify and analyze Risks

CAPM Model

One of three methods of computing the cost of retained earnings

CAPM Formula

Cost of R/E = Risk-free rate + Risk premium



= Risk-free rate + [Beta x (Market return - Risk-free rate)]

Quick (acid) Test

Cash + marketable securities + receivables / CL

Reorder Point (inventory)

The level at which a company should reorder or manufacture inventory.



Formula:


Reorder point = safety stock + (lead time x sales during lead time)

Lower of Cost or Market

Used for LIFO. Middle value of replacement cost, market celling, market floor.



Replacement cost: Given


Celling: net selling price less costs to sell


Floor: ceiling less the normal profit margin

APR of quick payment discount (formula)

APR = (360/Pay Period - Discount Period) x (Discount%/100-Discount%)



Expensive if you turn down discount from vendor or offer to customer



B2-37